The LaGrange Corporation had the following budgeted sales for the first half of

Question

The LaGrange Corporation had the following budgeted sales for the first half of the current year:

The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled:

Collections on sales:

45% in month of sale

35% in month following sale

20% in second month following sale

The accounts receivable balance on January 1 of the current year was $85,000, of which $55,000 represents uncollected December sales and $30,000 represents uncollected November sales.

The total cash collected during January by LaGrange Corporation would be:

Cash Sales Credit Sales January $ 60,000 $ 160,000 February $ 65,000 $ 180,000 March $ 50,000 $ 140,000 April $ 45,000 $ 130,000 May $ 55,000 $ 210,000 June $ 90,000 $ 240,000

Explanation / Answer

Cash sales 60000 Credit sales: November sales 30000 December sales 35000 =55000/55%*35% January sales 72000 =160000*45% Total cash collected during January 197000

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